APRIL 10, 2010 - IF THIS IS YOUR FIRST TIME VISITING THIS BLOG, THANK YOU AND PLEASE NOTE: There have been a lot of visitors asking if the 2008 tax credit repayment was eliminated. It has not been. The information on this page refers to the NEW tax credits enacted in 2009. If you purchased a home and took advantage of the $7500 tax credit in 2008, the repayment has not been eliminated.

UPDATE (Feb 18, 2009): Here are the current details for the new $8000 first time homebuyer tax credit which is non-repayable AND refundable for homes purchased between January 1, 2009 and Novemeber 30, 2009. Homes purchased in 2008 are still eligible for the previous $7500 first time homebuyer tax credit (but that credit is still repayable over 15 years). For more details on the new 2009 non-repayable tax credit click here.

UPDATE (Feb 12, 11:22am): Latest info about the compromise stimulus bill has the credit becoming an $8,000 tax credit (non-repayable) so it is a full credit, but it looks like it will apply to homes purchased by first time buyers between Jan 1, 2009 and August 31, 2009.

Presumably, the repayable version $7500 "credit" would still be an option for those who already purchased last year after April 9th. This are still many details unclear and this is subject to change so make sure to check back in to my new posts about it here. I will update as I get more information.

Ways and Means Chairman Charlie Rangel has released an outline of a $275 Billion tax package to be included in the Obama economic stimulus bill. Among its many provisions is one that would eliminate the repayment feature of the $7500 first-time homebuyer tax credit. An outline of the Senate Finance Committee package is expected shortly, as well, and is likely to also include the provision to eliminate the tax credit feature. Ways and Means markup on the bill is tentatively scheduled for January 22, 2009. The Finance Committee's deliberations will be roughly concurrent with Ways and Means.

The June 30, 2009 expiration for the credit remains intact in the Ways and Means package. NAR is working to have the effective date extended through the end of the year so that the more robust credit can have an impact. Congressman John Lewis (D-GA), a senior member of the Ways and Means Committee, has introduced H.R. 525, a bill that would extend the tax credit through December 31, 2009. (from N.A.R. Press Release)

Want to know what's really going on in the Boston real estate market with neighborhood by neighborhood trends?

Hello, do you know if the update to the tax credit would eliminate the repayment feature if I take the tax credit on my 2008 return for a home I purchased 7/25/08?

Michael DiMella

Richard, the new legislation is not finalized yet, so we'll have to wait and see...but indications are looking like this will be changed retroactively back to the original date of the credit - April 9, 2008 - so if you take the credit on your 2008 returns the change in the repayment status should still apply. We will need to wait until the bill is signed though to see how it reads for sure. We'll see....

Jason Kaleta

My wife and I are weighing taking the credit for our first home purchased in August 2008. Is there any new information regarding the new legislation eliminating the repayment option for us?

Dalton

Michael,

Will you update this site as soon we know whether or not buyers in 2008 (I purchased May 15, 2008)have to pay back the 7500? I'm drowning in the discussions, and this is the clearest statement on the matter I've found yet. Thanks.

Michael DiMella

Thank you for the kind comments! I am glad you find this blog informative. I will certainly update the blog as soon as we get a final bill which could be very soon. I know its been crazy with all the competing plans being floated but once something firm comes out i'll try to detail all the components. If you haven't subscribed to the blog (by email or rss) then I suggest you do that and you'll get notice of any new information I post as soon as I post it!

Michael DiMella

UPDATE: Latest info about the compromise stimulus bill has the credit becoming an $8,000 tax credit (non-repayable) so it is a full credit, but it looks like it will apply to homes purchased by first time buyers between Jan 1, 2009 and August 31, 2009.

Presumably, the repayable version $7500 "credit" would still be an option for those who already purchased last year after April 9th. This are still many details unclear and this is subject to change so make sure to check back in to my new posts about it here. I will update as I get more information.

Dalton

Hmmm. Not looking too good for me. I'm rejecting the 7500 if I have to pay it back. Just don't need to deal with it for the next 15 years. Thanks for the update, Michael. I've subscribed to get your updated but will keep checking back here as well.

Great info, I covered this in a < a href = "http://www.savingtoinvest.com/2009/02/15000-first-home-buyer-tax-credit-in.html"> recent article and clearly there are some tax questions and integration with previous credit to be resolved.

Lori

Has there been any discussion at all of why the date of April 9th was used? I purchased in feb. 08 and am really disappointed to be excluded from this. is there any possibility of them changing the window? There is so much talk surrounding this that i can't wade through it all! thanks for any tips anyone can provide.

Michael DiMella

Hi Lori - if you purchased in February of 2008, then you are not eligible unfortunately. The date of April 9th just happened to be the date set by Congress. I have not heard of any talk to change the dates, and I don't suspect that will happen, but I will certainly update this blog if I hear of any changes. If you haven't subscribed yet, you can do that to be notified of any updates.

Robert Reed

Michael,

Checking to see if there has been any updates regarding the $7500 tax credit regarding not to have to repay.

Thank you

Michael DiMella

Hi Robert, There have been no changes to the repayment status of the $7500 credit issued for buyers in 2008. I don't expect that there will be at this point, unfortunately for those of you who purchased in 2008.

Kristin

Michael,

Do you think if enough fuss is made that they will change the $7500 "LOAN" to no repayment? I see there is now talk about a $15,000 credit...this is crazy. Our government is so unfair/inconsistent!

Michael DiMella

Kristin,

I don't see the 2008 $7500 tax credit changing at all, even as they discuss extending the current 2009 $8000 full credit or adding additional credit in the future. It's all speculation at this point anyway (for any new credit), and I don't see the old ones changing, but I would always encourage you to contact your Senators and Representatives to tell them what you think!

Chad

My home closed on December 31st of 2008 (so I missed the tax credit that doesn't have to be payed back by one day). Even still, this seemed like a good idea at the time. Looking back, all this "stimulus plan" did was put me in more debt. After putting the money into my home, I now have another loan that has to be payed back in additional to my other debts. What kind of stimulus plan puts people in more debt? Any word on if this will be retroactive and not have to be payed back?

Cindy J

I bought my home in july 08.,did get the $7500 credit, but now I'm in a situation where I have to sell the home. With the $7500 from my understanding you do not have to live in the house for any specific amount of time but the repayment starts in 2010. It's a little unclear to me if i sell the home it says that if i make a profit the full amount is to be repaid. Example: if i bought the home for $100,000.00 and sell the home for 105,000.00 but I make no profit because I pay the new buyers closing cost, would that be considered a profit and the $7500 have to be paid back in full?

Shawn C

We are in the same boat as Cindy. We purchased our home in May of '08, and took the $7,500 "loan." We are getting ready to sell the house, and are contemplating selling it for what we paid, if not less, so the loan would not have to be paid back in full. Even if we were to sell the house for $5000 more, we would be losing money. Does not make sense! Someone make sense of this wonderful program!

Has anyone sold their house yet at the original price or a loss to avoid paying back the $7500. I am curious to see what happens and there is not a lot of literature about this yet.

Michael DiMella

Broc - I haven't heard of anyone selling specifically in that situation. Interesting thought though, and I'll write about it if I do.

Bridget

So.. you do not think they will change the loan to an actual credit and not make us pay it back if we purchased in 2008?? If you had to guess...what would you say? haha! ;) I would LOVE to not have to pay it back!!! We closed in Oct. 2008.

Michael DiMella

Bridget - unfortunately the $7500 tax credit from 2008 remains in its original form and is repayable over 15 years – no changes have been made. There is no indication that it will change in the future either.

Sorry…

Heather

I unfortunately am captive to the repayable tax credit from 2008. Man, I would love to see the repayment eliminated. If I do have to pay it back, though, can I pay it all back in one year instead of dragging it out over 15 years? I regret taking the money and just want to forget that it ever happened. :-) Any answer you have would be great!

Michael DiMella

Hi Heather, I don't know if I can all be paid back in one year, you may want to check with an accountant on that. But if it were me, I would take as long all 15 years to pay it back. It's "free money", so to speak, with no interest to pay on it. Might as well put it to work for you instead - even if its just a really safe investment earning some interest.

Reid

I'm sort of glad that I still have to pay back the original home buyer credit. I'm not one to take government hand outs. If you people didn't want to repay the credit you should not have taken the credit. It's an intrest free loan! That should be good enough.

Reading the updates to IRS 5405 the repayment is only on the gain of the house when you sell it, so paying all of it back may be unlikely for many people. The gain is based on much more than the purchase price too.

Amanda

so we took the $7500 credit when we pruchased out first home in the summer of 2008. We had to sell in summer 2009. we bought for 172,000 and sold for 177,000, but after realtor fees did not "make" any money. Do we have to pay back anything? like do we have to pay $5,000 back since that is the "profit" over what we paid? even though we didn't really make a profit in the end>?

Cindy

Amanda, I'm very curious to find out the outcome on your repayment. i haven't sold mine yet, but my sell would be very very simiilar to yours.. please follow up and let us know how it turns out for you

Broc

I think ultimately you are going to need a mortgage/real estate/closing company to get a worksheet to figure out the adjusted basis of your home (can include repairs, closing costs, etc) but here is what the IRS is saying:

http://www.irs.gov/taxtopics/tc611.html

Exceptions to recapture – In the case of a sale of the principal residence to an unrelated person, the increase in tax due to accelerated recapture is limited to the amount of gain (if any) on such sale. For purposes of calculating gain, the adjusted basis of such residence shall be reduced by the amount of the first-time homebuyer credit allowed, to the extent not previously recaptured. In the case of an involuntary conversion, recapture is not accelerated if a new principal residence is acquired within a 2-year period. No amount is recaptured after the death of the taxpayer.

Taryn

From what I understand, if you sell the home that you received the 7,500 on the remainder of the loan is due in one installment on the tax return for the year that the home is sold.

From irs.gov: "If you sell your home, all remaining annual installments become due on the return for the year of sale. The repayment is limited to the amount of gain on the sale, if the home is sold to an unrelated taxpayer. If there is no gain or if there is a loss on the sale, the remaining annual installments may be reduced or even eliminated. Taxpayers are urged to consult a professional to determine the tax consequences of a sale."

Justin

I called the IRS regarding the payback if house sold for no gain or loss. If you bought a house for 107,500. You now act like you bought the house for 100,000. So your sale will have to be less $7,500 of the purchase price.

Andrew

I finished doing my 2009 taxes yesterday. I took advantage of the $7500 "loan" and filled out the appropriate questions online regarding the repayment. All it asked was how much I received, and whether or not we were still in the home (yes). It told me that I did not have to make the $500 payment this year. Hopefully, I never will, as it seems unfair to make '08 home purchases repay and '09/10 not.

Matt

I bought a condo in sept. 08 for $110,000 and received the $7500 credit on my 08 taxes. I sold my condo in March 2010 for $110,000. I originally thought I did not have a gain on the sale. I know realize that in figuring my gain on the home, I have to subtract the credit from the purchase price so according to the 5405 form I gained $7500 on the sale and will have to repay all $7,500 when I file my 2010 taxes. Am I correct with my previous statement? Do I really owe the full $7500 all at once? Has there been any new information on a bill to eliminate the repayment?

Colette

Matt,

Have you heard anything ab having to repay the $7500 in one lump sum in 2010? I'm ab to be in a similar situation if my house sells for what I paid for it, which is apparently a gain. Does anybody know ab the repayment stipulations??

Also if my house sold for 95,000 (which is what I paid for it in 2008) and I had to pay 6,000 in reator commission fees, would my gain only be 1,500? And if so, wouldn't I only be required to pay the gov that 1,500? Thanks for the help.

Peter Hunag

Hi,

I bought a home in June 2008 and took the $7,500 first time home buyer credit but I put the house for rental in Aug. 2009 because I changed my job and relocated. Do I need to repay the whole credit in 2009 tax return? Thanks.

Lindsay

When you are calculating the amount you have to pay back when you sell your house, do you use the price you bought the house for, or the current amount you owe on the mortgage? For example, if you bought a house for $100,000 and took the $7500 credit, do you have to sell your house for $7500 less than the purchase price, or $7500 less than the current mortgage balance to avoid repayment?

Joe

I know you are sick of hearing this, but has there or do you think there will be a change to no repayment for the 08 credit? I have a baby on the way and I am worried about money at this time. Is there any kind of petetion going that we can present?

I have the full $7500 dollars now and want to pay ALL of loan back right now while I can so I won't having the loan to pay back at $500/yr. Can I send a check in full to the IRS now instead of dragging the loan out atr just $500/yr ?? Is the a form I can get from the IRS to fill out to send the whole $7500 now??

Brigette

You can sign a petition stating that it isn't fair that we have to repay the 7500.00 credit at www.petition2congress.com/2/2148/petition-7500-tax-credit

robert

I bought my house in September 2008. I received the 7500 dollar no interest loan from the government. I think it is unfair that under the American Recovery and Reinvestment Act people like me should have to pay back the 7500 dollars when people who purchased houses a few months later got a 8000 credit that does not have to be repaid. I am currently looking into filing a federal lawsuit in this matter. If you received the 7500 no interest loan let me know if you feel the same.

Joe

I agree Robert, let me know what you need to do to get this done. We tried to keep the economy going why should we be punished.

Cindy J

I'm totally on board and couldn't agree with you more Robert. My email is cindy19_79@hotmail.com. I'm in the same situation as the others here with the $7500 "loan". I've sent letters to the white house complaining about the injustice. Obama wants everyone to be educated on lending but didn't educate us that in a couple of months there would be no loan repayment. How's that for credit reform...

Sarah S.

Very informative blog, I appreciate it. We took the $7500 credit on our 2008 return.

Today a letter came in the mail from the IRS with only my husband's name on it, saying he had to start paying back $3750, $250 at a time starting with our next tax filing.

Is another letter on the way with my name on it and the other half of the balance? Or was the repayment amount lessened for some reason?

Shawn C

Received the same letter from the IRS Sarah, with just my wifes name on it, for $250 payement and balance of $3,750. This was a little more than 2 weeks ago, and still nothing in the mail with my name on it...

amit

same here-- recived IRS letter saying repayment of 3750 (250 each month), though I took 7500 credit in 2008. I was hoping there might've been some change to repay only half, but it looks like it might be just IRS problem in sending inaccurate information !! oh well...

Brigette Donahue

Still waiting on my letter from the IRS, but I'm shocked at the comment that said the IRS said he had to pay back 250 per month (instead of 250 a year) - is this what everyone else received also? I can't afford to repay at that amount per month. It was supposed to be 500.00 a year originally, to jump that to 250 per month is not going to work for most people who took that credit.

It is difficult to accept, especially when it was brought up to be elimanted then not included in the package.

I actually sold my home and calculated the repayment into the resell so that the asking price was more enticing to the buyer. Basically you can arrive at a figure that any dollar over that price goes to the government, up to the refund amount. Might as well use that to your advantage in your sell price if this comes up.

Carol

Received letter with just husbands name too. Cant find any info about it. It only says we have to pay back 3750. $250 a year.

CJ

I also received the same letter in only my name stating a total of $3750 repayment which is $250 per year for 15 years. I was expecting it to be the full $7500 @ $500 per year for 15 years. Will i be receiving one in my wifes name as well?

Brigette

I just received my letter a couple of days ago. It was for repayment of $3750 at 250 a year. I'm assuming I'll also get one in my husband's name with the same terms but so far we haven't received it yet. Not sure why the IRS is doing it this way - adds to the confusion.

GB

I also received the same letter that others are mentioning. This was one month ago and thus far my wife hasn't received one.

I have been looking for information to see if the repayment obligation was cut in half.

Robert Reed

My wife received the letter, I've tried contacting several agencies about this including the white house, so far no reply. I'm hoping to see it waived as they did for the others that used the $8,000 funds.

Colette

I am single and have not received any kind of letter from the IRS. Seems most people receiving letters right now (or responding to this blog anyway) are married. Just wanted to throw that out there for those of you who are keeping track.

Matt

I got the letter stating 250 per year for a total of 3750, not the 7500 we got. I got my letter, addressed to myself only, about 2-3 weeks ago. Haven't gotten a letter addressed to my wife yet... Would sure be nice if they cut the repayment in half- but I'm not holding my breath. I'm just going to invest the money and make as much as possible off of it while I have it.

Jim

My wife received the letter too. It seems like I might get a letter aswell but if you look at the letter again, it says 3750 credit received. I think they may have taken off half of the payment! I don't see why they would tell us they have received a credit and then send out another letter to the spouse for that credit. That would be too confusing.

R W

I'm really not sure this is worth the 15 year hassle we will be dealing with. My main irritation is that there would be a penalty if you do not make enough withholding to cover the 500 a year payback.It is insane that this was not left out of the penalty calculations. More complications to an already complicated system.

Can we just go ahead and send the whole thing back? If we do will we be penalized for under withholding? Knowing that this money needed to be paid back I have been very cautious in investing the money. With "safe" interest rates near zero it just doesn't seem worth it.

Jennifer Healey

We received the same letter with the half credit amount as everyone else, in only my husband's name. I too was looking for info to see if they had cut it in half (which would be seriously awesome!). If anyone gets a second letter for their spouse/partner, please let us know!

Brigette

I recieved two seperate letters, one for me and one for my husband each stating that we owed 3750.00 and needed to start paying off this amount at 250.00 a year (each). So it doesn't look like the government has cut the amount owed back. They just divide it I think in case one spouse dies, then his half of the debt is forgiven but you still owe your half.

alex

i recieved a letter too stating need to pay 3,750 @ 250 a year and probably they gonna send same letter to my wife for the half credit of 3,750? what if the house was forclosed? do i need to pay it in full amount?

laura

I really don't understand how i am suppose to pay 7500.00 for a credit that I thought was a CREDIT, I am very upset and don't know where I am going to get the money I am strugggling as is with the way the economy is please explain what I am to do.

Suzann

Took the $7500 credit for an October 2008 home purchase. I've now been transfered to another state and unable to sell my home. I was fully prepared to start paying $500 per year this year, only to discover that because I don't live in the house (still own it) the $7500 is due in full this year. If I'd bought in 2009, I wouldn't owe a dime, much less a huge lump sum.

Jared

If you sell the house for a loss or for a gain less than $7500 then that is all you are liable to repay to the IRS - go back and read the terms of the "credit". For those who complain they didn't know they had to repay, let's get serious there's no way you were unaware! For those who just merely invested the money - not a bad idea but provides no stimulus to the economy. I suppose you were still enticed to buy a house by it.

Anyway, I also received the letter saying $3750 is due. Though I still assume the full amount will be due its weird that there are no comments of anyone who received a letter for the full amount due.

Jennifer Healey

Well, I got my letter. (Hubby got his a few weeks ago) So I guess they split the responsibility between spouses. I'm not sure why they do this? I guess in case of divorce?

Laura, it is not a credit but it is credit extended to you. It's all in your documents that you signed. It is an interest free loan and $500 will automatically be deducted from your annual tax refund each year for 15 years. If you are surprised by any of this, then you didn't read what you signed.

John

I just received the letter addressed to myself only. My wife and I file jointly. Perhaps they send separate letters to spouses who file separately?

It seems for married couples, responsibility is split between the spouses. Thus, if they file separately, each will have to return $250/yr. If they file jointly, they may have to attach 2 copies of form 5405 and return $500 (I haven't read the form instructions, yet).

If one spouse dies, that person's portion of the credit is forgiven (the surviving spouse only has to return $250/yr or $3750 total). I suppose if the couple divorce, the "ex" who moves out must repay 3750 immediately while the one who stays may return 250/yr.

Jennifer Healey

John, we file jointly. We've never filed separately. I am a homemaker and therefore don't have a separate income.

Sherry

I received a letter a few weeks ago stating that it was time to start paying back the $7500, and that I owe $500. I bought my house in my own name.

Dan

My wife and I file jointly. Her name is not on the mortgage loan, just mine. She still got $3750 share in a separate letter. Sucks. LESSON LEARNED: Never take money from the government.

Jared

What is the lesson learned? We all knew the money was to be repaid over 15 years and we bought a new A/C and much more with our "credit" so it was a great benefit to have it. We finally received a letter for my wife - so now we both received a letter stating to start paying back $250 (each) per year. They could've just sent one for $500 to make it less confusing, but nonetheless the entire credit is due for those who borrowed the full credit.

matt

I took advantage of the 2009 $8,000 tax credit. Last summer my company moved me to a new city/state. I still have the original house and I am looking to rent it out. Am I doomed to have to repay the credit in its entirety? I still occasionally have business in my original city, could I keep the original property as my primary residency?

Jared

I would guess you don't have to repay it until you rent or sell it, or buy another home in your new city. If you are just renting at new location then I would think your home could remain as your permanent residence. Not sure how they define it. But I think the rule is for the $8000 credit that if you sell within 3 years you may have to repay the credit.

Michelle

I would also like to have more information on this. We have recently relocated to another state for work and have not sold our house yet. The IRS website states that you have to repay the credit on the tax return for the year that the home ceased to be your primary residence. It is unfortunately due in full. You can only claim that your old home is your primary residence if you live in the home for "the greater number of nights in the year." IRS also says that if you sell your home, you are only required to pay back the amount of gain that you receive on the sell. Ideally, I would be able to sell my house without making a profit and not pay back the credit. However, if I have to file taxes and repay the credit before I sell the house, this will not work. Here is a Q&A; link about this subject:

http://www.irs.gov/newsroom/article/0,,id=206293,00.html

If I had known all of this, we might have waited until January to take the relocation so we would have a year to sell the house before claiming it on taxes..

Danielle Purvis

What happens if we recieved the 7500 and we lose the home in forclosure and did not gain anything from it. Can someone tell me how this works as far as recieveing a 1099A form and how to calculate the gain?? I am sooooo confused!

ASHLEY

I RECEIVED A LETTER SAYING THAT EACH YEAR MY PAYMENT WILL BE $378.00 AN MY FIRST PAYMENT IN 2011 ON MY 2010 RETURN I WAS WONDERING WHEN THE FORM WAS GOING 2 BE AVAILBE BECAUSE IT HAVE A HOLD ON MY RETURN

MCW

Please sign to stop payment of $7500 tax "credit"

http://www.petition2congress.com/2148/petition-7500-tax-credit/

Karsten Holbein

Now that people will start to repay the tax credit I am sure this will become a more popular topic. I for one rented out my home I purchased in 2008 and now I am stuck with a huge tax bill. I don't think it's right for the first time homebuyers of 2008 to be obligated to pay back what others don't have to.

1. We supported the housing market first by jumping in when it was most uncertain.

2. Our home values still took a huge hit in 2009

3. With all the spending washington has been doing lately this should be at the top of the list to further support home buyers.

Chris

A lot of people are upset over this but look at the facts.

The definition clearly stated that it was not free money. Comparing it against 2009 and 2010 people is not a valid argument because what about everyone that bought a house before 2008 that did not get either the 2008 interest only loan or the 09-10 free tax credit.

Also, the deal was for first time home buyers. A lot of us used this money because we needed help with the down payment. It did the job, it got people into a home.

Also, this means that you are now eligible for a deduction that you didnt have before which is mortgage interest. Your mortgage insterest deduction should offset the $500 a year that has to be repaid. Their are plenty of other perks that have been added where you can offset the $500. The mortgage interest deduction alone should have you in no worse shape than if you never received teh money to buy your house.

I am not defending all the actions of our government but a lot of people need to face the facts of what they signed their name on.

Jared

I agree that people knew what they were signing up for, and $7500 interest free was still a good deal.

Replying to two posts back, yes it would be nice not to have to pay it back. But in your case even if you got the 09-10 free tax credit and rented your house out the next year then you would still have to pay it back. I believe you had to live there at least 3 years.

Bob

We may lose our home do we have to pay it back? If we only make 10 thousand would we have to pay it back? Thank you kindly

Jared

If you make money off the sale then yes you would have to pay it back. If you make $3000, you'd only have to pay $3000. If you make more than $7500 you have to pay back $7500. Good luck - i hope everything works out for you.

Bob

Thanks Jared. We have to move due to financial problems and own a mobile that we owe almost all on. So we will only realize if anything about 10,000

We may lose it what then? sorry for all the questions we are in a real jam. Thanks

Broc

To further Jared's point. Its not a simple calculation of Bought the house for $100,000, sold for $105,000 = $5000. You have to add fees, improvements, etc. Check out the instructions for IRS 5405 and calculating the adjusted basis.

Jared

Good point, Broc. As i'm not the IRS or tax advisor, Bob you should check out this link on the IRS website:

A foreclouser found out if no gain is no gain so that is the jist of it, you pay if there is a gain. Hope that does not happen but if we sell what would we have to move with? Oh well lots of people worse off then us. Thank you again

jdave

Is anyone else having trouble repaying the full amount of the credit when e-filing their 1040? I've submitted mine twice, only to have it rejected twice because the IRS has a 'different' number for the credit I received. I took the whole $7,500, and am trying to pay back the same. The IRS rep I spoke with told me that things looked OK in the system, but that it still wasn't accepting the return; a fix was in the works, but there was no set date. Any thoughts, other than filing a paper return and waiting 6-8 weeks?

Veronica

Many people who claimed the credit in 2008 and started to pay it back this year are having problems getting their refund. There is a Facebook page -2011 refunds delays code 1301- hundreds of people are reporting the same thing. My return was accepted Feb. 14th, should have received refund by March 1st, but it never came. I'm still waiting and every time I call they tell me they are having problems processing form 5405 and I should wait 30 days to call back.

Jared

Same here - my refund has been delayed for the same reason. I was told it'd be 6-8 weeks because it entered into the resolution center to find the problem. The guy said they are aware of the problem but not sure what's causing it. Whatever.

Bob

They sure did not have a problem taking the first payment out of my refund. Filed on th3 e 12th money taken out of my bank the next day.

So why they are holding up anyone is totally not justified they have the means to do this right.

Also that form is a no brainer it is included on the turbo tax and like sites. I did not use Turbo Tax this year as they are mistaken pensions with 401s and if you have a pension watch out half of it may end up due for taxes on some sort of penalty. Turbo Tax is a nightmare of problems go elsewhere.

Ruby

My (now ex) and I purchased a home in 2009, we each accepted a $2500 credit. He decided to end the relationship which ended in me moving from the home and signing over on the title. I received no funds for my share and now the irs is not only taking the $1000 plus that I had coming back buy also asking me to pay in an additional $1000 plus for the credit repayment. I only made $17000 last year and don't have much. Is there any sort of hardship I can claim? My ex still owns the home too. Not trying to cheat anyone, if I would have known I was going to not be in the home for 36 months I wouldn't have taken the money. And to top it off the funds I did receive went right back into the property, so in the end I'm left with nothing and owing more.

Brad

I have no problem paying back the credit at 500/year. That is what I signed up for.

However, I got a job out of town and had to sell the home that I received the credit for. I then used the gain from that home (including the 7500 credit) to purchase a new home. Basically rolled the credit into a new home.

Now I owe a lump sum in one year and not the 500/year repayment.

It is unfair to have to pay the entire 7500 back in a lump sum if it is rolled over into a new home. There should be an exception to the accelerated repayment if a new home is purchased.

Jared

I agree that it would be unfair if it wasn't clear in the beginning what the rules were if you sold the house. The good thing is that you got more than $7500 gain from selling your home so soon after purchasing it in this housing market. That's good to hear.

Leaha Weaver

My husband received a letter saying he had to begin paying back 250.00 per year towards the homebuyer credit. We filed this on our taxes and now I see that it should have been 500.00 based on earlier posts. I did not get a letter in my name and when completing our taxes on tax act, it did not say anything that I recall about a separate spouse letter and 2nd 5405 form. My refund has been delayed as has many who are paying this credit back. Will the IRS automatically correct my mistake and take the additional 250.00, or do I have to amend my taxes? They should have sent one letter addressed to both spouses!!!!!!!! So confusing!!

Paige

We received the 7500$ credit for purchasing our home. We are planning on selling it soon. Will the realtor's expenses be considered a profit?

Jared

My opinion is that the fees aren't considered profit...only what is left after all fees and concessions. so if you sell for $7500 more than you bought it but have $8000 in fees then you should not have to pay any additional credit back after the sale.

Broc

Alot of people in this group are feeling the impact of a tax refund delay specifically related to the 5405 First time home buyer form. There is a Facebook group about this and another site has a similar discussion. Go to Facebook and search for 2011 Tax Refund Delay.

The other site is a Car Loan site but they are talking about it in their blog here.

Michelle

We have to pay back our $8000 this year because we relocated for work before the 36 months. I also had a problem filing form 5405. I went to a tax preparer this year to make sure I did everything correctly. When she tried to electronically submit it wouldn't work, so we had to do paper file. They had no problem cashing my first payment though.

Perplexed home seller

I am curious if the $7500 interest-free loan from 2008 has a 36-month rule about repayment, or if that just applies to the $8000 credit. We bought our home in mid-May 2008 & sold it at a loss in late April 2011 (lived in it for 36 different months but not >36 months if you count day-by-day). Are we going to have the loan forgiven, or will we owe the remaining $7000 that we have not paid? It sounds like several posters here have sold in <36 months at a loss and concluded that their loan was forgiven. Thanks for your thoughts!

Anonymous

My husband & I purchased our home in June 2009 and received the first time home buyers tax credit. It is my understanding that the home must remain our primary residence for at least three years or we will have to repay the $8000. Unfortunately, my husband & I are divorcing & it's becoming increasingly more difficult to live together. Do both my husband & I have to live in the home for the three years or can just one of us maintain the home as primary residence? I've serached www.irs.gov extensively but cannot seem to find an answer to my question.

Michelle

To the previous comment regarding divorce:

If you filed a joint return, you are each responsible for half of the credit. When you get divorced you can transfer the house to either you or your spouse. Whoever it is transferred to is responsible for the repayment. You have to file a form 5405 with your taxes which has the option to state that you transferred the home to your ex-spouse.

http://www.irs.gov/pub/irs-pdf/i5405.pdf

See page 3 of the instructions for more info. This is just my understanding and interpretation of what I have read.

Michelle

I think this also means whoever the house is transferred to can keep the house for 36 months and not have to repay the credit. If they later decided to move before the 36 months they may have to repay the whole $8000.

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hi, I took the $7,500 tax credit when we bought our first home. We began repayment last year. In May 2011 we had to move out of state and decided to rent out our house. Do we owe the rest of the $7000 this tax year? Or does moving out of state to keep a job fall under the "special rules for involuntary conversions" the IRS lists on its website?

Kyle

So we're trying to decide whether to keep our house and rent it out, or sell it.

We are considering renting because it seems we will likely take a loss on the home. But with the non-repayment of the credit, that wouldn't be a huge deal if it meant we didn't have to pay the credit back.

My questions are...

If we've already paid back $500, would we get that money back if we had to sell for over a $7,500 loss?

Also, if we decide to rent it out for a year, and then sell it a year later for a small loss, what happens to the $7,500 credit money? We would have to pay it all back in one lump sum if we rent it out, but then if we sell for a small loss, do we get any of that money back?

Thanks.

Adam

http://www.irs.gov/pub/irs-pdf/p17.pdf

Go to page 108 for help on calculating gain/loss. It does factor in closing cost, fees, etc.

Chris Buffoni

Here's a quick breakdown of my scenario. My wife and I (both active duty military), bought a house in November 2008. My wife used to be an accountant, so she has a strong background with doing taxes. We only received ONE tax notice, saying we owed $250 last year, and $3,750 total due. So we thought, oh, cool! They cut it in half! Well, little did we know, they didn't. Now, we owe the $500 for this year, plus the $250 unpaid from last year that we thought was forgiven. PLUS penalties and late fees!!!! The IRS lady said "A lot of people didn't receive the second notice, but it's still your responisibility to read the fine print and know how much you owe.". I can't believe this! And now, we have orders to Delaware, so we either sell our house, which most likely won't happen by June, which is the date we are to be in Delaware, or rent the house out, in which case we'll have to pay back the "credit". We are so lost as to what to do!!!!!!! Any help/suggestions would be MUCH appreciated!!!!!! Feel free to email me at chrisbuffoni@gmail.com Thanks!

Tony

I bought a home in August of 2008 and took advantage of the $7500 credit. My question is, now that interest rates are much lower, if I refinance, will I need to pay back the remaining portion of the credit?

Megan

We bought our home in July 08 and took the $7500 "credit", my husband and I both lost our jobs in 2010. He got a job offer somewhere else, so we decided to move. We sold the house in 2011. Filed my taxes for 2011 andthe hrblock online system said we owed $4900. It specifically ask if we were in the home for at least 3 years, I thought for staying in the home for 3 years that the $4900 was prorated, so I thought I was all settled up with the irs, to my surprise, they wanted another $2600. A total of $7000 plus the $500 we repaid on 2010 taxes. I get that we have to pay the money back, however, we usually get about $2000 back, I know we over paid our federal tax obligation, where's that money going? AND, we owe late fees and interest on the $2600 because hrblocks system is not updated with the 2008 first time home buyers repayment laws and regulations. Now hrblock will pay the fees but NOT the interest accrued. I wish we NEVER would have taken this "interest free loan" it has wiped out all of our savings and then some, and forced us to sacrifice a lot till we recover from this. Who has $7000 in liquid funds available. We were fortunate to be able to pay the $4900 but a lot of others cannot and will likely be stuck owing irs interest and fees. And we still aren't out of the woods with this because at the point in time we still owe the $2600. I don't usually post to blogs but I hope my experience helps someone else's.

Megan

We bought our home in July 08 and took the $7500 "credit", my husband and I both lost our jobs in 2010. He got a job offer somewhere else, so we decided to move. We sold the house in 2011. Filed my taxes for 2011 andthe hrblock online system said we owed $4900. It specifically ask if we were in the home for at least 3 years, I thought for staying in the home for 3 years that the $4900 was prorated, so I thought I was all settled up with the irs, to my surprise, they wanted another $2600. A total of $7000 plus the $500 we repaid on 2010 taxes. I get that we have to pay the money back, however, we usually get about $2000 back, I know we over paid our federal tax obligation, where's that money going? AND, we owe late fees and interest on the $2600 because hrblocks system is not updated with the 2008 first time home buyers repayment laws and regulations. Now hrblock will pay the fees but NOT the interest accrued. I wish we NEVER would have taken this "interest free loan" it has wiped out all of our savings and then some, and forced us to sacrifice a lot till we recover from this. Who has $7000 in liquid funds available. We were fortunate to be able to pay the $4900 but a lot of others cannot and will likely be stuck owing irs interest and fees. And we still aren't out of the woods with this because at the point in time we still owe the $2600. I don't usually post to blogs but I hope my experience helps someone else's.

Megan

We bought our home in July 08 and took the $7500 "credit", my husband and I both lost our jobs in 2010. He got a job offer somewhere else, so we decided to move. We sold the house in 2011. Filed my taxes for 2011 andthe hrblock online system said we owed $4900. It specifically ask if we were in the home for at least 3 years, I thought for staying in the home for 3 years that the $4900 was prorated, so I thought I was all settled up with the irs, to my surprise, they wanted another $2600. A total of $7000 plus the $500 we repaid on 2010 taxes. I get that we have to pay the money back, however, we usually get about $2000 back, I know we over paid our federal tax obligation, where's that money going? AND, we owe late fees and interest on the $2600 because hrblocks system is not updated with the 2008 first time home buyers repayment laws and regulations. Now hrblock will pay the fees but NOT the interest accrued. I wish we NEVER would have taken this "interest free loan" it has wiped out all of our savings and then some, and forced us to sacrifice a lot till we recover from this. Who has $7000 in liquid funds available. We were fortunate to be able to pay the $4900 but a lot of others cannot and will likely be stuck owing irs interest and fees. And we still aren't out of the woods with this because at the point in time we still owe the $2600. I don't usually post to blogs but I hope my experience helps someone else's.

megan

Sorry for the 3 posts, I'm posting this on my phone and it wasn't showing that it posted until I left the website and came back.

BS. Cameron

We file that $500 on that 7500 tax credit on our yearly tax return. We pay it by the year as required not by the month.